Union Budget 2019: What Is India's Expenditure And How Does The Government Spend Its Money

Union Budget 2019

On Friday, July 5, Finance Minister Nirmala Sitharaman will present the first Union Budget of the Modi government 2.0. The budget speech will take place at 11.00 am in the Lok Sabha.

Written By Apoorva Rao | Mumbai | Updated On:

On Friday, July 5, Finance Minister Nirmala Sitharaman will present the first Union Budget of the Modi government 2.0. The budget speech will take place at 11.00 am in the Lok Sabha. By delivering the budget,  Sitharaman will be the first woman to do so since former Prime Minister Indira Gandhi who had also then held the finance portfolio.

In February, ahead of the Lok Sabha elections, interim Finance Minister Piyush Goyal had presented the interim Budget.

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What is government expenditure and how its spends the money

Government expenditure includes all consumption, investment and transfer payments by the Centre. In national income accounting, the acquisition by the government of goods and services for current use, to directly satisfy the individual or collective needs falls under the government final consumption expenditure.  Whereas, its acquisition of goods and services for creating future benefits infrastructure investment or research spending is called government gross capital formation. Both kind of spendings by the government, on final consumption and on gross capital formation form one of the major components of the gross domestic product.

Once the Centre has its revenue expenditure in place, it spends over 85% of it for the day-to-day running of the country. This is termed as revenue expenditure, which is a short term expenditure. The rest of it is for longer-term growth and returns and is called capital expenditure.

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The government spending of India increased rom Rs 3411.26 billion in the fourth quarter of 2018 to Rs 3686.66 billion in the first quarter of 2019. It averaged to Rs 2065.20 billion in from 2204 to 2019. It was the highest in the third quarter of 208 (Rs 40.86.45 billion) and lowest in the second quarter of 2004 Rs 735.82 billion.

The Budget was kept in utmost secrecy until the D-day on Friday. It was prepared by Union Minister Sitharaman's team led by Finance Secretary and Economic Affairs Secretary Subhash Chandra Garg. The team comprises of K Subramanian who is the Chief Economic Advisor, Principal Economic Advisor Sanjeev Sanyal, Financial Services Secretary Rajeev Kumar, Revenue Secretary Ajay Bhushan Pandey, Expenditure Secretary GC Murmu, DIPAM Secretary Atanu Chakraborty. 

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